TIPS^®  Taiwan Intellectual Property Special

Taiwan Updates

Request for Termination of Compulsory Licensing to Use Philips’ CD-R Patents, Filed by Both Sides. 

The Taiwan Intellectual Property Office’s decision to grant compulsory licensing of Philip’s CD-R technology to Gigastorage in July, 2004, is still very controversial and under much debate and great scrutiny. Philips made an appeal to the Administrative Appeals Committee (AAC) of the Ministry of Economic Affairs (MOEA) immediately after the TIPO made the decision. However, in June 2006, the AAC rendered a final decision, sustaining TIPO’s administrative decision.

Philips considered that the TIPO’s decision to grant compulsory licensing violated the WTO’s TRIPs, and has already filed a complaint with the European Commission, and requested that the TIPO should terminate Gigastorage’s compulsory licensing. The TIPO held the first review hearing in March this year, but due to a lack of evidence from both parties, a second review hearing was scheduled, and officials from the EC will also visit Taiwan to conduct field surveys and investigations.
Just two days prior to the scheduled second review hearing, on April 23, 2007, Gigastorage applied to the TIPO to terminate its compulsory licensing to use Philips’ CD-R patents, claiming that it would relocate its manufacturing base to Thailand, so there is no need to use the licensed Phillips patents any more. Even though both parties seemed to have reached consensus on the termination of the compulsory licensing, Philips and Gigastorage were still in conflict, each holding a different view on the reasons for the termination. On one hand, Gigastorage’s reason that the compulsory licensing has become unnecessary; while on the other hand, Philips thinks the compulsory licensing should not have been granted in the first place. Therefore, EC investigators are still going to investigate into the matter.

During the second review hearing, Philips presented customer information, sales market research reports, and other information, and requested the TIPO prove whether Gigastorage’s products are mainly manufactured for domestic supply only. In other words, Philips still demanded an investigation on Gigastorage’s reason for the termination. Nevertheless, as the termination of compulsory licensing requested by Gigastorage became effective on May 31, Philips should have gathered all the evidence and made confirmation prior to the said date. In light of this, EC representatives will assist Taiwanese officials’ investigation, to clarify the legal basis and handling of this case, and determine whether the TRIPs is violated.

The TIPO stated that even after the termination of the compulsory licensing on May 31, Gigastorage is still obliged to negotiate with Philips regarding the amount of compensation during the period of compulsory license. The TIPO also advises Gigastorage to dispute the calculating of the production amount of in a separate legal proceeding, in order to simplify and resolve the termination issue.